Micro_tutorial_6

What does a rational consumer aim to do?

• Maximize income

• Minimize spending

• Maximize utility

• Spend all their income

The utility function represents:

• The cost of goods consumed

• Total utility derived from a consumption bundle

• The indifference curve's slope

• The income available for consumption

The concept of diminishing marginal utility implies:

• Each additional unit of a good consumed adds more to total utility

• Utility decreases with each additional unit consumed

• Each additional unit of a good consumed adds less to total utility

• Utility is constant with each additional unit consumed

An individual's consumption bundle is defined as:

• The entire set of goods and services an individual consumes

• Only the goods an individual buys frequently

• Only the essential goods in a person's budget

• The goods that maximize utility

Which of the following statements is true about indifference curves?

• They can intersect

• They slope upward

• They show all consumption bundles yielding the same utility

• They are vertical lines

What happens to the budget line when income increases?

• It shifts inward

• It shifts outward

• It becomes vertical

• It rotates

Indifference curves for ordinary goods are generally:

• Upward sloping and convex

• Downward sloping and convex

• Upward sloping and straight

• Downward sloping and concave

What is the formula for marginal utility per dollar spent?

• Marginal utility divided by total income

• Total utility divided by quantity

• Marginal utility divided by price

• Price divided by marginal utility

When a consumer's marginal utility per dollar spent on two goods is equal, they are:

• Minimizing total utility

• Maximizing total utility

• Spending less than their income

• Decreasing their marginal utility

If clams cost $4 per pound and potatoes cost $2 per pound, what is the relative price of clams in terms of potatoes?

• 0.5 pounds of potatoes

• 2 pounds of potatoes

• 4 pounds of potatoes

• 8 pounds of potatoes